[1] The case holding that a person who actually exercises the authority as a representative director and actually participated in the management shall be deemed to constitute a representative subject to the disposition by recognizing the representative, and the controlling shareholder shall not be deemed to be a nominal representative director solely on the ground that there

[2] The purpose of the provision of the system for recognition of representative under the Corporate Tax Act and whether the difference between the tax base determined by the method of estimation investigation and determination and the net income on the corporate balance sheet should be considered in the case of the recognition of representative under the method of estimation investigation and determination (negative)

[1] Article 67 of the Corporate Tax Act, Article 106(1) and (2) of the Enforcement Decree of the Corporate Tax Act, Article 14(1) of the Framework Act on National Taxes / [2] Articles 66(3), 67, and 68 of the Corporate Tax Act, Articles 104(2) and 106(1) and (2) of the Enforcement Decree of the Corporate Tax Act

[2] Supreme Court Decision 89Nu8231 delivered on September 28, 1990 (Gong1990, 2205) Supreme Court Decision 92Nu3120 delivered on July 14, 1992 (Gong192, 2454)

Plaintiff (Attorney Kim Sang-sung et al., Counsel for the plaintiff-appellant)

Head of Guro Tax Office

Seoul High Court Decision 2004Nu10564 delivered on June 29, 2005

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Based on its adopted evidence, the court below acknowledged that the plaintiff was the representative director of the non-party 2 and the non-party 3, who is the de facto controlling shareholder of the non-party 1 corporation, and was appointed as the non-party 1 corporation for the purpose of conducting administrative affairs such as the completion inspection of new building at the time of judgment on the non-party 1 corporation, and that the plaintiff actually performed the administrative affairs related to the completion inspection of new building at the time of judgment on the non-party 2 and the non-party 3, and that he received part of the compensation agreed upon. The court below determined that the plaintiff was not the representative director of the non-party 1 corporation, who actually exercised the authority as the representative director of the non-party 1 corporation and actually participated in the management of the non-party 1 corporation, and it is difficult to view the plaintiff as the representative director under the name of the non-party 1 corporation on the ground that there is

2. Regarding ground of appeal No. 2

Under the Corporate Tax Act, not based on the fact that such income has been generated to the representative, but the purpose of the corporate tax law is to have certain facts that can be recognized as such in order to prevent unfair conduct under the tax law by a corporation be considered as bonus to the representative regardless of their substance (see Supreme Court Decision 92Nu3120, Jul. 14, 1992). In particular, in cases where a bonus is disposed of to the representative after calculating the tax base by the method of estimated investigation and determination, whether the difference between the net income on the tax base determined by the method of estimated investigation and determination and the corporation’s balance between the net income on the corporate tax base and the corporation’s balance sheet (referring to the amount which has not deducted the corporate tax amount) has been leaked outside the company, or if disclosed outside the company (see Supreme Court Decision 89Nu8231, Sept. 28, 190).

According to the reasoning of the judgment below and the records, as non-party 1 corporation did not report corporate tax for the business year 200 and 2001, the head of Sungnam Tax Office imposed corporate tax after calculating the corporate tax base by estimation investigation and determination method, and disposed of the amount corresponding to the above corporate tax base (the net income based on the balance sheet of the non-party 1 corporation was not deducted by failing to submit data) as bonus to the plaintiff as the representative director on the corporate register, and accordingly, the defendant issued the disposition imposing the global income tax of this case. In light of the above legal principles as seen earlier, in order to determine who actually belongs to the plaintiff as bonus, the issue of who actually belongs to the representative of the case and is not related to the

Therefore, we cannot accept the Plaintiff’s ground of appeal on the premise that the disposition imposing global income tax in this case violates the principle of substantial taxation under the premise that the amount of the disposition as bonus belongs to Nonparty 2 or Nonparty 3.

3. As to the third ground for appeal

The main text of Article 106(2) of the Enforcement Decree of the Corporate Tax Act provides that “The difference between the current net income and the net income on the tax base and the balance sheet of the corporation determined by the estimated investigation and determination (referring to the amount not deducted as corporate tax amount) shall be the bonus from the disposal of profits to the representative.” The proviso of Article 106(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 17457, Dec. 31, 2001; hereinafter “former Enforcement Decree”) provides that “Where the total number of stocks owned by a stockholder who is not a minority stockholder under Article 87(2) of the former Enforcement Decree and a person with a special relationship under paragraph (4) of the same Article owns not less than 30/100 of the total number of stocks issued or total amount invested by the corporation, the officer shall be the representative (hereinafter “special provisions”).

According to the reasoning of the judgment below and the facts revealed in the records, the non-party 2 and the non-party 3 asserted that the plaintiff falls under the representative of the above special provisions and cannot be deemed to have actually performed the duties of the representative director or director on the corporate register of the non-party 1 corporation. Thus, the non-party 4 and the non-party 5 cannot be deemed to have actually controlled the management of the non-party 1 corporation and the non-party 1 corporation. Thus, the non-party 4 and the non-party 5 cannot be deemed to have "the non-party 5 actually controlled the management of the non-party 1 corporation." Thus

Although the reasoning of the court below on this part is inappropriate, the conclusion that rejected the plaintiff's assertion is just, and there is no error in the misapprehension of legal principles as to the representative prescribed by the special provisions of the court below.

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Nung-hwan (Presiding Justice)